The Indonesian government will buy 500,000 metric tons of locally produced rubber to help rubber farmers. The Indonesian rubber association said the rubber should come from infrastructure development, such as using rubber in asphalt mix for roads.
Indonesia is the second biggest producer in the world. The country has been affected by the low rubber prices in the past few months.
“This revitalization is aimed at increasing domestic production to boost demand and change the rubber price at the global level,” Agriculture Minister Amran Sulaiman said in a statement. The government would provide subsidized loans to farmers to replant one million hectares of rubber plantation between 2016 and 2019.
Indonesian rubber board chairman Moenarji Soedargo said the move to buy rubber was in line with a plan by Asia’s top producers to cut exports by 615,000 metric tons for six months from March to support prices.